Time-effective and cost-efficient, alternative dispute resolution gives the parties involved more flexibility and control over the process and outcome of business-related disputes; i.e. partnership, employment, or contract disputes. Alternative dispute resolution (ADR) is essentially any method of resolving disputes outside of the courtroom without litigation and is the preeminent approach to dispute resolution.
Historically, parties that can resolve disputes through ADR are more satisfied, mainly due to in part of their own direct participation in determining the terms of the settlement. ADR helps avoid time-consuming and costly litigation and minimizes conflict through constructive conclusions.
For more information regarding common partnership disputes, please refer to our previous post – On Partnership Disputes & How to Avoid Them
Common Types of Alternative Dispute Resolution
Mediation
In mediation, an impartial third party facilitates the role of “mediator” during a face-to-face meeting of all parties involved. They assist in a dispute by helping to identify concerns and develop options or alternatives in order for disputing parties to attempt an agreement.
Typically, a mediator doesn’t provide their own opinion or assessment of the dispute and play no role in deciding any given outcome.
Arbitration
During arbitration, a neutral party named the “arbitrator” listens to arguments and observes evidence presented by each side of a dispute and then determines the outcome. Arbitration is similar to the litigation process in some ways, wherein the arbitrator decides the outcome, but is still less formal than a trial.
Arbitration may be “binding” or “nonbinding” depending on the terms agreed upon by all parties before the arbitration process begins. A binding agreement means the parties involved relinquish their right to a trial and will agree to the arbitrator’s decision. A nonbinding agreement means the parties involved may opt to litigate if they do not accept the arbitrator’s decision.
Conciliation
Similar to the mediation process, conciliation involves the use of an impartial third party to identify issues and work to develop options for resolution as the parties involved try to reach an agreement. The difference between a conciliator and a mediator is conciliators usually play a more active role in the dispute resolution process. The conciliator may provide specialist expertise, make suggestions to both parties based on expert advice, and may even actively encourage parties involved to reach an agreement.
A conciliator may not, however, provide private counseling, choose sides, or make decisions. They may only provide expert advice or suggestions.
Neutral Evaluation
During a neutral evaluation, each party involved in a dispute can present their case to an impartial third party called an “evaluator”. The evaluator is usually an expert on the subject of the dispute and may be judge-appointed. The purpose of a neutral evaluation is to give each party an authoritative opinion of the strengths or weaknesses of their argument. This helps parties involved in disputes to determine possible resolutions and whether or not litigation may be beneficial.
An evaluator’s opinion is not binding and is likely to be used as a starting point for dispute resolution negotiation.
The Clear Advantages of Alternative Dispute Resolution
A Single Procedure
ADR grants parties the ability to resolve disputes during a single procedure without lengthy and ongoing courtroom hearings.
Reduced Expenses
Likely the most common reason for the utilization of ADR is the reduction in costs associated with dispute resolution through litigation proceedings.
Confidentiality
Litigation and courtroom records are usually open to the public. Through ADR, parties can come to an agreement to keep all proceedings and conclusions confidential. This affords the parties involved the ability to focus on the outcome of a dispute without concern for any public impact.
Finality of Decisions
Depending on the agreed upon terms, ADR awards are not usually subject to an appeal. Courtroom decisions can often be contested through more litigation.
No Jury
Business entities often choose ADR over litigation due to the fact that it prevents a decision being made by a jury. Many types of ADR take advantage of specialist expertise and authoritative professionals in order to reach a resolution. This is usually preferred over a group of random jurors that may have little knowledge of the nuances of your dispute.
Preserve Corporate Relationships
Business is business and the use of ADR may be able to preserve the chances of any ongoing business relationships between the disputing parties where litigation and court proceedings may very well dismantle the professional relationship.
When to Seek an Attorney’s Help with Alternative Dispute Resolution
Every form of alternative dispute resolution carries with it a number of crucial advantages when compared to traditional litigation. From saving time to saving money and facilitating greater satisfaction for all parties involved. The above advantages are only a small collection of benefits of ADR, a business attorney can help clarify which method of ADR is the most applicable to your situation.
An Alternative Dispute Resolution consultation with a business law attorney can help you understand the benefits and potential drawbacks for every method of ADR as they pertain to the context of your case. To learn more or to schedule a consultation with the experienced legal group at Bridge Law, please call or contact us online today.